HC Deb 27 October 1988 vol 139 cc455-84 3.30 pm
The Secretary of State for Social Security (Mr. John Moore)

With permission, Mr. Speaker, I wish to make a statement about the uprating of social security benefits. The necessary statutory instrument, which will bring my proposals into effect, will be laid before both Houses and debated. Uprating will take place for most benefits in the week beginning 10 April next year, the first full week in the tax year. The provisions will apply in both Great Britain and Northern Ireland.

This year I have more increases than usual to announce. I am varying some of the increases to target them better on those who need them most; and I am pleased to announce additional help for claimants to ensure that we are more than correcting for the error discovered in the retail prices index last year.

I propose to concentrate on the main features. I have set out the details in a full schedule which is now available in the Vote Office and which, with permission, Mr. Speaker, I shall publish in the Official Report.

The social security budget is huge; nearly £50 billion a year, almost one third of all public expenditure. The increases I am announcing today amount to more than £2 billion. It is thanks to the growth in the economy and to the success of our economic policies that we are able to afford to bring this substantial help to pensioners, disabled people and lower income families on benefit. It is right that we should continue to help in this way everyone who needs that help, but it is equally right that we should continue to target this massive expenditure, to ensure that it is concentrated to best effect, on those who need it most. I should like to make it clear that this is where my priorities lie, in carrying forward the policies which I began last year, of redirecting increases within these large sums, to be most helpful to those in most need of help and to stimulate the proper responsibilities and personal efforts of those who do not need to rely on benefit.

I start with the main rates of contributory benefits and benefits for war pensioners, disabled people and others. The retail prices index published on 14 October showed an increase in prices over the 12 months to September 1988 of 5.9 per cent. But the RPI was subject to a minor error which was corrected during this period. That increase of 5.9 per cent. corrects the error which was made earlier in the RPI. That is, 5.9 per cent. includes both the correction for the error and the rise in prices since then, but to make quite sure that benefits are uprated by at least as much as they would have been if the error had not occurred, they will be uprated either by the published figure of 5.9 per cent. or by the amount arrived at by recalculating the benefit from the last correct rate in July 1986, using the adjusted movement in prices since then, whichever figure is the higher.

I should like to emphasise that. We shall pay whichever is the higher figure from the two calculations which we have done for each benefit. If we had not done this, pensioner couples, for example, would, using recalculated figures for past upratings, have been 5p a week worse off. This approach more than fulfils the promise which my hon. Friend the Minister of State gave the House last December, when the error was discovered.

On top of the special payments of over £100 million already made to pensioners and others earlier this year, I am now putting the benefit rates right for the future in the most favourable possible way. I am placing in the Library of the House full details of all the rates, and of all the calculations needed to carry out our intention to adopt a "best of both worlds" approach.

The basic retirement pension for a single person will thus rise by £2.45 a week, from £41.15 to £43.60, and for a married couple by £3.90 a week, from £65.90 to £69.80. Pensioners' total incomes, including their occupational pensions and savings, have grown steadily since 1979, by over 23 per cent. on average in real terms compared with a miserable rate of 0.6 per cent. a year between 1974 and 1979. After allowing for inflation, pensioners' incomes have increased twice as fast as those of the population as a whole between 1979 and 1986. A range of Government policies has played its part in this record, and it is one of which we, as a Government, are proud.

Public service pensions will be increased by 5.9 per cent. This fulfils the pledge given by the Paymaster General to correct the RPI error.

I turn now to the income-related benefits. I restructured these benefits last April in a simpler scheme with new rates which is already proving much easier to understand and operate. I propose to uprate these benefits in the normal way by the published movement of prices less housing costs. In addition, in recognition of the minor error in the RPI, there will be further increases for pensioners, disabled people and families comparable to those for people on contributory benefits.

Overall, these measures to take account of the RPI error will cost some £10 million more than simply uprating by the published indices.

We are making a once-and-for-all adjustment to income support levels to help meet the minimum 20 per cent. contribution which recipients will have to make to the community charge. This will also provide help for the rates liability which recipients in England and Wales will face next year. To this end, we are including £1.15 a week for single people under 25 and £2.30 for couples. I am leaving the figure for single people over 25 at £1.30, the present level, since that is the assistance they are currently receiving towards their domestic rate liability. This significant group will thus be more than compensated over the longer term—a more than adequate settlement.

Before I come to the other increases I wish to announce, hon. Members will expect me to say something about child benefit. I have never made any secret of my belief that this benefit is not the most effective use of social security resources. It is paid to virtually every family in the country, no matter how large their income, at a cost of over £4.5 billion this year, a tenth of all benefit expenditure on social security. Furthermore, if we were to uprate it across the board, most of the money would go to better-off families, including the very wealthiest. The poorest—those on income support—would gain nothing at all from the child benefit increase; neither would those claiming family credit. That would, I believe, be perverse targeting in the extreme.

I have decided, therefore, as last year, to direct help where it is most needed, to the lower income families with children. I propose to put substantial aditional resources into the benefits going to those families. I have already said that there will be a prices uprating of the child allowances and premiums in income support, family credit and housing benefit. That uprating will cost £135 million. But, on top of that, I am adding an extra 50p a week to all these child allowances. This will cost an additional £70 million. The result is that we shall be directing over £200 million to the greater benefit of some 3 million children in lower income families. The rates for some children—for example those under 11—will go up by as much as 9.3 per cent.: well in excess of a normal uprating. These families will clearly be better off than if we had simply uprated child benefit, which I propose to leave unchanged.

I know that some of my hon. Friends have expressed concern about the position of families on low incomes. Unlike other parts of the benefit system, however, such as income support, when it comes to helping working families with children, there is no cut-off point at low income levels. Family credit goes well up the income scale—for example, to those people earning £9,300 a year with two children aged 12 and 14, and even higher in some cases. I firmly believe that it is better to target resources in this way than to improve child benefit for all, including those on the highest incomes.

I have further increases to announce, for disabled people, the elderly and families with young children. This is the tenth anniversary of Motability, the scheme set up to help disabled people to obtain cars on favourable terms. The scheme has been extended and has a fine record of success. It is now helping 60,000 people. I am pleased that this anniversary has been marked by the grant in May this year of a royal charter. I am very glad to announce today that the Government will be contributing £5 million to a special trust fund which is being set up to celebrate the anniversary. Motability is a joint venture between Government and the private sector, and the clearing banks also will be contributing £5 million. These new funds will increase fivefold the money available for Motability to spend each year, and in particular will in future provide extra help for the more severely disabled people who need a specially adapted vehicle.

I shall also be bringing forward legislation to extend the upper age limit for mobility allowances from 75 to 80. This will be an interim measure pending our consideration of the series of reports on the OPCS survey of disabled people. All this is good news for disabled people.

Finally, I propose useful and what I hope will be welcome improvements to the very good scheme that we already have for giving help during periods of very cold weather to pensioners, disabled people and families with young children on income support. First, I am changing the rules for the period over which temperatures are measured. This will in future be any consecutive seven days, and not limited to seven days starting on a Monday. Secondly, I am raising from two to five the age below which a child can make a family eligible. That will extend the scope of the scheme to nearly half a million more families. I shall be amending the regulations recently laid before the House to include these improvements which, taken together, could double expenditure on the scheme. I believe that it will be extra money well spent.

This is an uprating which directs massive resources to where they are most needed. My proposals amply fulfil our pledges to pensioners and others who receive long-term benefits. They provide substantial extra help to families on low incomes and to disabled people. And, with other measures which I shall be bringing forward, they encourage those who are able to do so to support themselves and their families. Some 16 million pensioners and others in all will benefit, at a total cost of over £2 billion. That is the full measure of the success of this Government.

Mr. Robin Cook (Livingston)

The Secretary of State began by saying that the increase that he was announcing would result in an increase in expenditure of over £2 billion. The right hon. Gentleman will recall that the planning figures in January's White Paper showed the social security budget increasing by over £2.5 billion. Is he telling the House that in a year in which inflation has doubled he is to spend less on social security than the planning figures in January? If so, will he explain why he has secured less than his planning figures in a public expenditure round in which his colleagues have secured over £3,000 million for other expenditure?

The Secretary of State has announced that for the sixth year running pensions are not to be uprated by a fraction of 1 per cent. more than the rise in prices. I am sure that pensioners will be grateful that he has secured for them the additional 5p to which he referred. Will he also confirm that if his Government had not smashed the link with earnings the married couple's pension would, after today, be worth £18 per week more than he has announced? Is that not the measure by which his Government have cheated pensioners of their share of Britain's wealth?

The Secretary of State announced that income support is to increase by 4.7 per cent. Is he not aware that one in five of those on income support will not receive even that increase? Will he confirm that half a million of the long-term unemployed, disabled and pensioners who found their benefit cut last April received no increase last year and will receive no increase from this announcement? Is that the way in which the Government protect the income of some of the poorest people in Britain?

Mr. Geoffrey Dickens (Littleborough and Saddleworth)

The hon. Gentleman did not listen.

Mr. Cook

I not only listened to the statement; I read it.

I invite the Secretary of State to convey our thanks to the Chief Secretary of the Treasury for having obliged him to settle for higher compensation for the poll tax demand than he himself bid for. Will he confirm to the House that the figures he has announced to the House mean that the Government are expecting the average poll tax demand to be £299? That is one fifth higher than any of his colleagues has so far admitted—a clear admission that the poll tax is not only unjust but that it will be expensive and inefficient as a tax as well.

Will the Secretary of State confirm that he is seriously proposing to increase housing benefit by reference to the RPI less housing costs? How does he expect to explain to housing benefit claimants that it makes sense to increase their benefit without reference being made to the rise in rents and rates?

The Secretary of State has announced an extra £70 million for family credit and child additions. Will he concede that the amount that he has saved by freezing child benefit is £206 million, and that therefore he is pocketing £136 million at the expense of child support? Will he admit that current expenditure on family credit is well below planning figures because the take-up rate is a disaster? Does he recall promising the House that the family credit take-up rate would be 60 per cent.? Will he confirm that it is currently running at the pathetic level of 30 per cent.—barely half the figure he promised the House?

The Secretary of State keeps telling us that he is in favour of targeting. Why then does he place so much reliance on a benefit that is so badly targeted that it misses two out of three of its targets? Child benefit is the best targeted benefit for putting cash in the hands of mothers who feed and clothe children. Will the right hon. Gentleman admit that the value of child benefit is now £1 less than it was in 1985? To a mother of two children, that is a loss of more than £100 per year—the price of two pairs of shoes and two winter anoraks. If, as we are constantly promised, Britain has the strongest economy in Europe, why are we approaching 1992 with the lowest level of child support in Europe?

Will the Secretary of State explain to the House what was meant by his party's manifesto pledge that Child benefit will continue to be paid as now"? In view of his statement that he has made no secret of his view that it is a poor and badly targeted benefit, why did he not share those beliefs with us before polling day last year? Is not the truth now that all ages, from children to pensioners, are being cheated Out of the full benefit and the full uprating that they should receive?

The Secretary of State has just announced his annual budget for the poor. He will be aware that we shall judge it by the generous standards set by the Chancellor's Budget for the rich. The question asked today by millions of claimants is, "Why can the Government find thousands of millions of pounds for tax handouts but cannot find any extra money for the social security budget?" The Government will be judged on their answer, not by the House, but by a nation that is weary of watching the poor being cheated so that the rich can be rewarded.

Mr. Moore

This statement, as well as the Budget, will continue to be judged by the nation which will continue to return Conservative Governments after performances of the kind that we have seen in the House today.

I shall try to deal as quickly as I can with the points raised by the hon. Gentleman. He will be aware that we are looking forward, in the next month, to the Autumn Statement to be made by my right hon. Friend the Chancellor of the Exchequer. He will see the reality of the increase in the size of my overall programmes and he will understand what he might have understood before—I should have expected him to—the relationship between the large reduction in unemployment, happily welcomed by both sides of the House, and the consequential major reduction in unemployment benefit. He will then be able to put the figures together.

On the point about pensioners, I find it extraordinary that a Labour party spokesman should have the temerity even to debate this issue when we have spent the past nine and a half years putting good Labour's dereliction of duty to the pensioners. Over five years of Socialism, the pensioner not only had his savings stolen but saw a mere 3 per cent. average increase in his income. That 3 per cent. over five years can be compared to our record of 23 per cent. For the first time in decades, the pensioner, in comparison to those in work, saw his income decline under Socialism. That was the product of five years of Socialism.

The hon. Gentleman asked me about income support. He obviously has not checked thoroughly. I will give him more details about the precise position in regard to income support and transitional payments, but for the period that we are discussing, from the uprating forward, for example, 97 per cent. of all pensioners will receive an increase and only 13 per cent. of pensioners still receiving income support will not. The vast majority will be out of transitional protection by the time we reach the second part of this year.

As to the community charge—I say this with great care to an hon. Member whom I have known for a considerable time—I have the greatest contempt for those who steal and leak documents, and for those—[Interruption.]—and for those—[interruption.]

Mr. Speaker


Mr. Moore

—and for those who traffic in them. I am surprised and dismayed at the actions of the hon. Gentleman, for whom I have some regard, and at the way in which he has damaged his standing and reputation by being a party to receiving, destroying and publishing highly classified documents. [Interruption.]

Mr. Speaker


Mr. Moore

He has been misled and has misled others by extracts from a confidential document taken out of context. I trust that the hon. Gentleman is listening very carefully. I hope that he will help to identify the person who gave him that letter; or does he wish us all to assume that he gives his protection to people who handle stolen documents?—[Interruption.] In regard to the hon. Gentleman's question, he is, of course, utterly wrong in his conclusions. We live—this party always does when in government—up to our pledges. We promised that the income support rates would include the average amount that recipients would have to pay towards the community charge, which is not the same as the expected average community charge. The figures that I have announced more than meet that pledge.

The hon. Gentleman asked about housing benefit. I do not begin to understand the nature of his question, because he knows—and those Opposition Members nodding and grinning inanely from a sedentary position also know—that all those uprated on income support will have a 100 per cent. protection.

The hon. Gentleman finally asked about child benefit in comparison to family credit. I find it utterly bewildering that in 1988 the Opposition cannot recognise the massive increased resources that have gone to the poorer families because of this statement. To argue the matter, as they have, in the context of a year when many have seen radical reductions in their taxation and large increases in their earnings is to ignore the enormous targeted impact that we have been able to make. Of course, they are right to say—[Interruption.]

Mr. Speaker

Order. It is very unseemly to shout.—[Interruption.] Order. The House has asked for details. We should now receive them.

Mr. Moore

The Opposition, of course, are also right to say that all of us should encourage better take-up of family credit. I fully accept that, but that is no reason indiscriminately to waste taxpayers' money. They conclude by asking whether this matches. It matches completely my party's manifesto pledge at the last election.

Several hon. Members


Mr. Speaker

Order. Before I call Back Benchers to ask questions on this very important statement, I remind them, as the Secretary of State has said, there will be debates on these matters. I ask hon. Members to put single questions and not to repeat what may have been said by those who are called before.

Mr. Terence Higgins (Worthing)

Does my right hon. Friend accept that his policy of seeking to concentrate resources on those who are in need, rather than to spread them indiscriminately, must be right? Is it not absurdly inconsistent for Opposition Members to object to reductions in income tax and at the same time say that we should give help on a completely tax-free basis to those same families who in another context they would describe as the super-rich?

Mr. Moore

My right hon. Friend is exactly right. I shall give an illustration of the kind of impact that my announcement will make upon those families for whom I thought that we should all be caring. I shall take a couple with two children, aged 11 and 14, with a father earning gross about £135 a week. As opposed to the £14.70 a week that family is currently able to claim on family credit, it will be able to claim £20.73, which is an extra £6 a week.

Mr. Frank Field (Birkenhead)

Having made his announcement today, does the Secretary of State have some sympathy for Jimmy Thomas who, after making a similarly difficult statement to the House, said that if one was unable to ride two horses at once one could have no part to play in the "bleeding circus"? Is the Secretary of State's position not more difficult because Government policy is driving the horses in different directions? The more successful he is in targeting help on the poorest families in work, the greater will be his and the Government's defeat in loosening people from long-term welfare dependency.

Does the right hon. Gentleman agree that, until we get a party, whether on this side of the House or the other, which is prepared to be radical enough to phase out largely middle-class tax welfare so that we can have a standard tax rate of 10p in the pound and a doubling of child benefit, we shall never give people at the bottom of society the incentives that we have given to people at the top?

Mr. Moore

I always listen carefully to the hon. Gentleman. Not everybody is as erudite on this subject as he might be, but I hope that he will enable others to understand the relativity of what we are doing. Approximately 45,000 people on the upper bands of low income are brought into the potential of family credit advantage as a result of what I have announced. That must be seen in the context of the 1.6 million families who benefit directly as a result of what we are doing. I hope that the hon. Gentleman will also remember that, because of the major changes that we made to align income support and family credit earlier this year, there is no longer a poverty trap with rates of tax and benefit withdrawal of over 100 per cent.

There is, therefore, very little impact—other than a beneficial one—on the families we are talking about becâuse they are already in work. The impact occurs only when their income increases. I hope that the hon. Gentleman accepts that being able to help 1.6 million families with 3 million children is a worthwhile target and will have very little effect in terms of bringing people into the benefit culture.

Dame Jill Knight (Birmingham, Edgbaston)

There will be universal approval, acclamation and congratulation from the ranks behind my right hon. Friend on his statement. We thoroughly approve of and support what my right hon. Friend has said about pensions, help for the disabled and child benefit. Does not my right hon. Friend think it ridiculous that the Opposition support people being able to claim child benefit on the very day that they put their son down for Eton? Will he explain that there is all the difference in the world between giving a handout and allowing people to keep a little more of their own money?

Mr. Moore

My hon. Friend will remember that our hon. Friend the Member for Pembroke (Mr. Bennett) was recently told that about £1 billion of child benefit money goes to families who earn more than £20,000 a year.

Mr. Archy Kirkwood (Roxburgh and Berwickshire)

Perhaps the most significant thing about today's statement is the fact that the Secretary of State said nothing about the future of child benefit. It would be of assistance to the House if he could say whether we can expect it to wither on the vine.

Is the right hon. Gentleman satisfied with the take-up of family credit? Is it not languishing at a rate of 30 per cent. at the moment? Is that not an indictment of targeting? Will he confirm that, as a result of what he has announced, more families will be brought into high marginal rates of tax? What does that do for personal incentive and the ability to earn more and better oneself? Can the right hon. Gentleman estimate the number of claimants who, by next spring, will lose transitional protection to the extent that they will get no cash increase at all?

Mr. Moore

I thought that I covered the hon. Gentleman's latter point earlier. About 97 per cent. are out of transitional protection, but I shall send the hon. Gentleman the details. The hon. Gentleman is making a valid point about the degree to which some people are included if benefits are extended up the scale. The consequence is that their replacement ratio is changed. The hon. Gentleman must realise that such people's replacement ratios are low. They are not on the highest replacement ratios. The effect that the hon. Gentleman is worrying about is not nearly so significant as the corresponding benefit. The ability to target on 1.6 million families is significant. We have been able to provide help for them.

The hon. Gentleman asked about the future. I am statutorily bound to look at and review, in the context of each year's public expenditure round, the level of child benefit. That is what I have done. The House may have forgotten that, in 1975, when the Child Benefit Act was introduced, a Labour Secretary of State for Social Services—Barbara Castle—refused even to have a statutory review until her Back Benchers, with the support of the Opposition, forced it upon her. She argued, strongly that the benefit should never be indexed, but that it should be reviewed annually. That is what we will do. My party keeps its pledges. We said at the general election that we would maintain child benefit as it is. That obviously means that I still have a statutory responsibility next year to reconsider, in the light of the economy and all other factors, what I should do with the benefit system then.

Sir Ian Gilmour (Chesham and Amersham)

The House will welcome much of the statement. As, on the Government's own optimistic figures, only 60 per cent. of the poorest families will take up family credit, whereas child benefit has a nearly 100 per cent. take-up, how does my right hon. Friend justify making nearly 40 per cent. of the poorest families in Britain even worse off for the second year running?

Mr. Moore

I do not think that my right hon. Friend is as aware as he might be of the working of family credit. I accept what he says about take-up. Our job must surely be to increase take-up rather than indiscriminately to waste public money. The Government will introduce new take-up campaigns and hon. Members should do what they can to encourage take-up. That must be the right way forward, as a result of which I can, as I could today, help 3 million more children, and families who are less well off rather than those who can afford not to hvhave an increase. The House is debating the issue as though we are abolishing child benefit. We are not. Some £4.6 billion will still be sent at a rate of £7.25 to every child indiscriminately.

Mr. Stanley Orme (Salford, East)

Is the right hon. Gentleman aware that the introduction of child benefit—I was one of the Ministers involved in the battle to get it implemented—meant that, for the first time, women got a benefit in their own right? I know from experience in my constituency that there are thousands of women who are grateful for that. Because of the ceiling on child benefit, its value is being reduced. This is a retrograde step. The Secretary of State should upgrade child benefit this year in line with inflation.

Mr. Moore

I should like to remind the right hon. Gentleman of what Mrs. Castle said in July 1975, with, I believe, his and others' support. She said:

There is a difference between routine national insurance benefits and this new benefit. Indexation of the child benefit is inappropriate. National insurance benefits are major means of support when earning capacity is interrupted, but the child benefit is a tax-free supplement to families whose major source of income is earnings. Clearly maintenance benefits must be capable of moving automatically in line with changes in the cost of living. The child benefit is in a different category."—[Official Report, 7 July 1975; Vol. 895, c. 238.] The only difference today is that we are in government—we were then in opposition—and recognise some of the arguments that were advanced. The right hon. Gentleman should remember that the Labour Government, in which he was a well-known Minister, decided not to index child benefit automatically.

Sir David Price (Eastleigh)

Does my right hon. Friend agree that the majority of fair-minded people in this country will accept his broad purpose of concentrating help on the most needy, but does he accept that the most effective way to achieve that yet identified by the House is the tax credit scheme that was put forward in 1972 by Lord Barber and supported by an all-party Select Committee which reported to the House in 1973?

Mr. Moore

I am aware of that scheme, but, with great respect to my hon. Friend, the benefit structure has moved on considerably since then. However, I agree with his first remark that we must find better ways of helping the poorest families, as I believe we have done today.

Mrs. Margaret Ewing (Moray)

Is the right hon. Gentleman making any provision for increasing the uptake of benefits? It seems that many voluntary organisations are left to try to increase the number of people who take up benefits. Surely the Government have a moral responsibility, particularly in the light of today's very depressing announcement about not uprating child benefit. Since he is so keen on targeting allowances, will he refer back to the heating allowance scheme which he has announced and say why he does not target such an allowance to take account of climatic conditions, since it is 40 per cent. more expensive to heat a house in Aberdeen than in Bristol? Why do we not have a continuous, automatic payment for pensioners, the ill and the handicapped during winter months?

Mr. Moore

Taking the last point first, the hon. Lady should be aware that we use 63 different weather stations, so we take into account varying weather conditions. On her main point about family credit, we have had two major advertising campaigns using television commercials and the national press. During the summer the Department of Employment had a campaign—"How to be better off in work"—which featured family credit, and I shall be introducing a new campaign in November, trying to contact all those in receipt of child benefit—a very targeted campaign. Obviously, we shall consider whether to introduce even more campaigns, certainly in advance of the uprating next spring.

Mr. Timothy Raison (Aylesbury)

Does my right hon. Friend recall that in 1985 there was a most exhaustive examination of the whole of our social security policy which led to the conclusion that child benefit should be retained? Is it not the case that to retain child benefit but not to increase it is tantamount to a major change in policy? Does my right hon. Friend recognise that any decision to lower child benefit in real terms would cause great disappointment to many Conservative supporters, and would be a breach of a very long tradition in this country that those with children need special help from the state?

Mr. Moore

I know my right hon. Friend's sincerely held views on the issue. I assure him that I do not consider this to be a change in policy. I am statutorily required to examine the whole pattern of benefits, as well as the way in which earnings and taxation in the economy have changed during the year. I then have to reach a judgment on the most effective way of handling the very important structure of support for children. We are spending nearly £10 billion on helping families with children. I reassure my right hon. Friend that if we express the points that I have sought to make this afternoon, if we show our friends in the country, and all fair-minded people, that we are trying to help families with children even more than we could if we simply raised child benefit, we shall have their universal support.

Mr. Elliot Morley (Glanford and Scunthorpe)

Is it not the case that all the talk about targeting benefits is completely bogus when the Government gave £3 billion to the richest? Is it not the case that the changes in capital gains tax alone for a minority of the wealthiest people in our society would have covered the uprating of child benefit? The targeting that has taken place under this Government has been targeting money out of the pockets of the poor and into the pockets of the rich.

Mr. Moore

Thanks to the extraordinary success of the economy, and especially to my right hon. Friend the Chancellor's supply side policies, I am able to make massive increases, so that there has not been a single question about the Government's ability to increase pensioners' incomes this year. I am able to do that as a direct consequence of the successful economy from which we are receiving the wealth that comes from taking less instead of giving more.

Miss Emma Nicholson (Torridge and Devon, West)

Does my right hon. Friend agree that his Department's first task is to ensure that the take-up of family credit is heartily increased and is made an excellent first step in totally computerising the system? His Department must move forward into the modern world on all other fronts and computerise all benefit systems so that there is proper take-up of all benefits. While he is doing that, no doubt he will examine the case of families above the £10,000 take-home pay level who still badly need family credit or child benefit.

Mr. Moore

My hon. Friend is right to say that, at the beginning of family credit, it was difficult to set up a completely new system. She will be pleased to know that the turnaround, even with having to contact employers, is now running at the target of 18 days, and there is a 70 per cent. success ratio. All hon. Members should be anxious to encourage people to apply for family credit. On her last point, I reiterate that on top of the measures I have announced today we are still spending £4.5 billion on child benefit for all.

Mrs. Audrey Wise (Preston)

How can the Secretary of State justify the fact that people with children are now worse off compared with those without children? If he is so keen on targeting to those in need, when will he change the attendance allowance system to provide help for families with severely chronically sick babies? It is nearly a year since Opposition Members proved the necessity for such help.

Mr. Moore

From our discussions in the Social Services Select Committee I know that the hon. Lady makes the mistake that is frequently made of assuming that the only way in which we can help families or anyone else in our society is through the benefits system. She cannot ignore the major changes that have taken place in earnings and in the taxation system in our country over the past few years which have benefited many families.

On the hon. Lady's last point, although I well remember the debate upstairs on that issue in which she participated, we are in the process of receiving the OPCS reports, and we must receive them and digest them in trying to decide what to do on that issue, as well as on the other points she made.

Mr. Robert McCrindle (Brentwood and Ongar)

Although I welcome the changes that my right hoh. Friend has announced on family credit and income support, at the risk of expressing what I know is a minority view on these Benches, may I ask whether he will confirm that no benefit other than child benefit is paid to the woman and has a take-up close to 100 per cent.? In those circumstances, will he confirm that that is ideal targeting and that it is difficult to go beyond that? If we are to take a major decision on these matters, should we not look closely at the continued existence of child benefit altogether? To have it but not to uprate it and to cause it to be eroded seems to be getting the worst of both worlds.

Mr. Moore

I do not think that it is the worst of both worlds when one considers the overall pattern of help to families with children. Each year we are statutorily bound to make a judgment, which in this instance not only targets £4.6 billion indiscriminately to all families with children but gives the families who are least well off more than £200 million. It seems to me that is an intelligent judgment which does not deny our election commitment and does not deny my ability to target more effectively.

As for my hon. Friend's second point, of course family credit goes to the mother, but 100 per cent. take-up is not difficult to achieve if the benefit goes to everybody. I do not understand how people can believe that that is an effective example of how to help, as everybody is given something, including those of us who do not think we merit an increase in our child benefit. I am not quite sure what point that proves in the effectiveness of the delivery of the benefit. I entirely agree with my hon. Friend that we must find better ways to get across the exceptional value of family credit.

Mr. Seamus Mallon (Newry and Armagh)

The Secretary of State will be aware that basic requirements such as heat, food and electricity cost 30 per cent. more in Northern Ireland than anywhere else in Britain. He will also be aware that no provision was made for that differential when the terms of the new social security provisions were drawn up. Does he agree that that is a basic injustice to the people of the North of Ireland inasmuch as they will always be 30 per cent. poorer in relation to social security than people in the rest of Britain? Will he give a commitment that the differential will be dealt with? If he does not, allied to the freezing of child benefit, the people of the North of Ireland will see themselves as 31.5 per cent. less equal than the rest of the people in Britain.

Mr. Moore

I am not sure that I follow the hon. Gentleman's point. He addresses one particular differential within the kingdom. The benefit structure throughout the United Kingdom has always been such as not to differentiate between different areas. There may be advantages in one or two areas in doing that, but I am not sure that the hon. Gentleman would wish to pursue that point. I shall certainly draw his comments to the attention of my right hon. Friend the Secretary of State for Northern Ireland, and I shall look at his comments myself.

Mr. Nicholas Winterton (Macclesfield)

I welcome my right hon. Friend's civilised and well-thought-out statement. However, will he deal in slightly more detail with the question raised by my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) about the fact that child benefit is the only major benefit paid directly to the mother and that that money is used directly to benefit the children, whereas family credit is not? However, we welcome the substantial rise in resources available for family credit. Is not child benefit important because it goes directly to children through their mother?

Mr. Moore

I thank my hon. Friend for the first part of his question and remind him that, although family credit is not as extensive in its coverage, it goes to the mother. That is the point I was trying to make to my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle).

Mr. James Lamond (Oldham, Central and Royton)

If the Secretary of State believes that the child allowance is an indiscriminate waste of taxpayers' money aimed at the wrong people, why did he support the commitment in the manifesto that it would continue?

Mr. Moore

I did not say that. I said carefully—my statement is on record—that I have to make a judgment each year and that I believe we have acted in the most effective way. That is the judgment I have to make in the allocation of the large amount of resources.

Sir Charles Morrison (Devizes)

Last year my right hon. Friend said that, because of the ill-targeted nature of child benefit, he would keep it under review. To my mind, that implied either that, having done so, he would uprate child benefit to take account of inflation or he would abolish it and replace it with something else. Why has neither happened?

Mr. Moore

No. My precise words were that I have a statutory duty under the Social Security Act 1986 to keep it under review and to look at the uprating each year. That is what I will continue to do. That does not imply that we are committed to any change or any decision for next year. It means simply that for this year I do not believe that uprating would be the most effective use of the resources.

Ms. Diane Abbott (Hackney, North and Stoke Newington)

Does the Secretary of State agree that it is dishonest to try to make out, as he has, that the uprating of family credit is some form of substitute for index linking child benefit? As he knows, child benefit has an almost 100 per cent. take-up whereas the take-up for family credit is about 50 per cent. Most women who are not taking it up are the poorest and least advantaged women who need it most.

Mr. Moore

Surely the hon. Lady should join me in trying to assist in a series of announcements designed to enable us to help the poorest families with children even more than if I had simply uprated child benefit. The hon. Lady is saying that we are not communicating properly and that we are not reaching those people. That is what we should be doing, not wasting money.

Mr. Robert Key (Salisbury)

I warmly congratulate my right hon. Friend on his statement and on the way in which he delivered it under great provocation. Does he agree that there is a serious problem with the take-up of benefits and that there is a serious problem with fickle men who expect their wives to do without cash and of divorced women who cannot get their hands on their just maintenance but that not one of those problems will be solved by uprating child benefit?

Mr. Moore

My hon. Friend has expressed his point extremely well. That is exactly what I was trying to get across. I hope that we will all join in a major national campaign to try to help our constituents to understand the potential benefit for them in family credit.

Mr. Rhodri Morgan (Cardiff, West)

About 10 minutes ago the Secretary of State quoted the answer given to the hon. Member for Pembroke (Mr. Bennett) some time ago that £1 billion of child allowance goes to families earning more than £20,000 a year. That was said with disapproval as if it had been abolished. He has allowed that to continue. He must accept that Members on both sides of the House agree that a judicious mixture of means-tested benefits and universal benefits is what is needed. Universal benefits do not suffer from a stigma and have a high take-up rate, whereas means-tested benefits have a stigma and a low take-up rate. Does he agree that what he has announced today is another step down the slippery slope towards American-style welfare policies, which have been such a disaster in the ghettoes and rural areas of America?

Mr. Moore

I urge the hon. Gentleman to reconsider his comments. When he asked for a judicious mixture of benefits, he expressed almost exactly what I have announced today. I have sought to make a judgment so that some people on means-tested benefits benefit more as a consequence of what I have said. I do not believe that in the world in which we live there is stigma attached to the receipt of benefits such as family credit. If there is such a stigma, it is our job to eradicate it so that we can effectively use public money genuinely to help people.

Sir Giles Shaw (Pudsey)

Does my right hon. Friend accept that his statement showed his compassion, commitment and courage? Will he accept that the argument about child benefit is yesterday's argument and that tomorrow's argument is the twin-track view of targeting and take-up? In achieving his objectives for tomorrow, will he please let us know a little more about how he can improve the take-up levels, bearing in mind that it is a matter not just of information but of complexity versus simplicity and of the time available to benefit officials to work through problems with claimants?

Mr. Moore

My hon. Friend is right. We have tried to simplify the system. There was considerable difficulty in starting the new family credit system, especially as there was a postal strike in the middle of it, which did not help—[interruption.] The postal strike was nothing to do with humbug but was to do with people. However, I should not be persuaded to take account of idiotic interruptions from a sedentary position.

We have tried advertising on television, in newspapers and with employers. We will now try targeting specifically those who we feel might be able to take up family credit. I am looking carefully at ways in which we can add to those campaigns. I would appreciate any and all suggestions, including those from my hon. Friend.

Mrs. Rosie Barnes (Greenwich)

If the Government feel that child benefit is ineffective because it is universal and not targeted, how can that be reconciled with their commitment to the married man's tax allowance—it will become the married couple's tax allowance—which is similar in that it is across the board but addresses a far less tangible cost than that of bringing up children?

Mr. Moore

I repeat that child benefit is one of the benefits on which I have to make a judgment. The rest are related to family credit and income support, to child credits and family premiums. In my judgment, I thought that simply uprating child benefit this year would not be the most effective use of resources. I know that the hon. Member for Greenwich (Mrs. Barnes) follows these matters. I hope she will consider carefully the fact that in particular circumstances major increases in the real incomes of poorer families have occurred as a consequence of the changes that I have been able to announce today.

Mr. George Walden (Buckingham)

The logic of my right hon. Friend's decision on child benefit is irrefutable. It is interesting that the hon. Member for Livingston (Mr. Cook) made no serious attempt to refute it. The trouble with logic is that it carries one forward into unexpected areas. Will my right hon. Friend explain to the Chancellor of the Exchequer the attractions of applying the same logic to tax relief on mortgages—another indiscriminate benefit accounting for precisely the same sum of £4.5 billion? [Interruption.] Perhaps the Opposition will wish to aid the well-off to buy houses as well as to have children. That would be a very interesting ideological position for them to take. Well-off people have had their taxes reduced from 60 to 40 per cent. They still benefit from indiscriminate mortgage tax relief. They still benefit from child benefit which they do not need, and they will benefit from the introduction of the community charge. Will my right hon. Friend therefore talk to the Chancellor of the Exchequer and explain the attractions of a more logical approach by the Government to all these matters?

Mr. Moore

I shall certainly talk to my right hon. Friend the Chancellor, as I frequently do. I think that I already have enough issues to cover in the uprating, but I shall draw my right hon. Friend's attention to the point that my hon. Friend has made.

Mr. Allen McKay (Barnsley, West and Penistone)

Will the Secretary of State consider a return to the system of linking old-age pensions to earnings or to the rate of increase in the cost of living, whichever is higher? Does he agree that that is the only way in which elderly people can have a share in what he calls the growing wealth of this country?

What am I to say to the young women who come to my surgery on Saturdays and Sundays, who have already lost £7, £8, £9 or even £11 a week in housing benefit, and who are now to suffer what is tantamount to a further cut as a result of the freezing of child benefit?

Mr. Moore

It is important to understand what actually happened when pensioners were theoretically advantaged by the existence of the link to which the hon. Gentleman referred. In fact, over the whole period of that link pensioners were much more disadvantaged than they are today. One cannot isolate the effect on pensioners of one part of Government policy. It was a tragedy, and not something that the former Labour Government wanted, that a combination of policies meant that average pensioner incomes decreased in relation to earnings. We have now returned to the position that existed before the Labour Government's period in office. I cannot espouse policies, as the last Labour Government did, that would hurt pensioners.

Mr. Robin Squire (Hornchurch)

Does my right hon. Friend recognise that, despite the welcome aspects of his statement, we are inevitably concentrating attention on ways of getting effective family support? Does he also recognise that that unites us rather than divides us, but that some of us at least believe that until we can substantially increase the take-up of family credit, piling more of the onus on family credit and removing it from child benefit can only mean that many of the poorest families will simply not receive the support which he and I agree they need.

Mr. Moore

I know of my hon. Friend's deep commitment and interest. I am sure that he would not have wished me simply to increase child benefit given that, despite the take-up problem, which I accept, as a result of the changes that I have announced poor families will potentially be better off.

Mr. Brian Wilson (Cunninghame, North)

Does the Secretary of State accept that in constituencies such as mine the freezing of child benefit will be viewed with dismay? It will be regarded as another turn of the screw for families living just above the poverty level. Is the Minister honest enough to accept that if the Tory party manifesto had contained a commitment to freeze child benefit for two successive years he would probably not now he sitting on the Treasury Bench?

Will the right hon. Gentleman address himself to a specific question and tell us what his statement contains for the families of 16 and 17-year-olds—of whom there are several hundred in my constituency—who from next Friday, contrary to Government guarantees, will have no jobs, no YTS places, no benefits and no money'? How does he square his unctuous expressions of compassion with the fact that 16 and 17-year-olds, having been betrayed by the Government, are to be cast on to the street without a penny of legal income from any source? Does the Secretary of State accept moral responsibility for that action?

Mr. Moore

The hon. Gentleman's constituents will view what I have said with dismay only as a consequence of the inaccurate way in which their interests are represented in the House and of his continuing to argue the same point. I know something of his constituency, and if the hon. Gentleman did his work as a Member of Parliament rather than pursue that argument, more of his lower-paid constituents could benefit from increased take-up.

Hon. Members

Answer the question.

Mr. Speaker

Order. Mrs. Peacock.

Mrs. Elizabeth Peacock (Batley and Spen)


Mr. Frank Dobson (Holborn and St. Pancras)

On a point of order, Mr. Speaker. Surely it is not in order for the Secretary of State to refuse to answer a specific and readily comprehensible question and then to accuse my hon. Friend the Member for Cunninghame, North (Mr. Wilson) of not doing his job. Surely it is the Secretary of State who is not doing his job.

Mr. Speaker

I am not responsible for answers from the Front Bench, provided that they are in order.

Mr. Wilson

On a point of order, Mr. Speaker.

Mr. Speaker

I shall take it, although I suspect that it is a point of irritation.

Mr. Wilson

Is it in order for the Secretary of State to cast such aspersions and, in the course of doing so, to refuse to answer a question about 16 and 17-year-olds? Who is not doing his job properly, given that the Secretary of State refused to answer a specific question affecting a substantial number of people? I am concerned about 16 and 17-year-olds in my constituency; clearly the right hon. Gentleman is not.

Mr. Speaker

I am anxious to call as many hon. Members as possible. I cannot be held responsible for the answers that are given. I am sure that the Secretary of State did not intend to cast any aspersions. [Interruption.] Order. I shall give the Secretary of State an opportunity to say that he did not mean to make any personal aspersions against the hon. Member for Cunninghame, North (Mr. Wilson) or any other hon. Member.

Mrs. Peacock

Does my right hon. Friend recognise that all hon. Members would wish to help their constituents to know exactly how to claim family credit? When he prepares his campaign, will he let hon. Members have a draft copy so that we may take it to our local newspapers and radio stations and thus encourage our constituents in need to apply for benefit?

Mr. Moore

My hon. Friend makes a very good point. As I said earlier, so far 70 per cent. of applicants for family credit have been successful. It is a high ratio. In the interim—before we have more campaigns—hon. Members wanting to help their constituents could draw their attention to the fact that application forms are available, not just at benefit offices, but at all post offices.

Mr. Peter L. Pike (Burnley)

Does the Minister accept that, despite the pensions uprating announced this afternoon, our state pension provision is among the lowest in the EEC? Does he also accept that, as a result of the phasing out of the state earnings-related pension scheme, many manual workers and women will continue to be worse off? Does the right hon. Gentleman accept that, every time he talks of better targeting, the Government save money at the expense of many of the most deprived and needy people in the country?

Mr. Moore

The hon. Gentleman's EEC comparisons are utterly bogus. Only three EEC states, including the United Kingdom, have flat-rate basic pensions. As to the overall commitment of the state to help pensioners, the United Kingdom comes third for help and support.

Mr. Derek Conway (Shrewsbury and Atcham)

Will my right hon. Friend accept that he is morally correct and will receive the support of fair-minded people in targeting help on the needy? When my right hon. Friend finds the person who has taken letters in a thieving manner to the Opposition, will he get him to make a photocopy of the Official Report of 25 May 1976, when the Labour Secretary of State for Social Services made a special statement on child benefits and explained precisely why they were being frozen as part of the Government's overall economic strategy? Why should Labour Members carp on and shed crocodile tears when they were having to put up with it at exactly this time in 1976? They are hypocrites.

Mr. Moore

As my right hon. Friend the Prime Minister reminded us at Prime Minister's Question Time, it was only in their last month of office—April 1979—that the Labour Government increased child benefit to a level that could be compared with what it has been under this Government.

Mr. Eddie Loyden (Liverpool, Garston)

Is the Secretary of State aware that thousands of claimants are experiencing serious hardship because of the inadequate provision made through the social fund? Why has he ignored what in all probability is one of the worst aspects of the horrible social security review? Is he aware that many people are being deprived of the means to enable them to sleep on a bed? Why has he ignored this important problem affecting the poor?

Mr. Moore

From the hon. Gentleman's comments, I do not recognise the workings of the social fund, the loan profile of which is running at over 90 per cent., while the figure for community care grants is 52 per cent. I should like to be able to say what we shall be putting into the social fund in the future, but so far I regard it as having been one of the unique successes of the transformed social security system.

Mr. John Maples (Lewisham, West)

I welcome what my right hon. Friend said about child benefit, but many of us think it wrong that the Inland Revenue is allowed to take £4.5 billion from husbands so that the Department of Social Security can give it back to their wives. My right hon. Friend is right to use whatever additional money he has to help low-income families, through family credit and income support. Will he take every opportunity to explain to the country and the Opposition, who do not seem to understand, that increases in child benefit are of no use whatever to 25 per cent. of lowest income families because their income support or family credit will be reduced by exactly the same amount?

Mr. Moore

My hon. Friend is right. It is an exact offset, which is one of the reasons why I was so determined to ensure that those families benefited this year and in double terms.

Mr. Max Madden (Bradford, West)

What has the Secretary of State to say to the widow living in Bradford with five children, who earlier this year—[Interruption.]

Mr. Speaker

Order. It is perfectly in order for the hon. Gentleman to make that point.

Mr. Madden

It seems that Conservative Members have as much compassion for widows as they have for 16 or 17-year-old youngsters living in this country with no money.

What has the Secretary of State to say to the widow living in Bradford with five children, whose income earlier this year was 14p above income support, thereby depriving her children of free school meals? As a result of the decision made by Tory-controlled Bradford city council to increase the cost of school meals, from a week next Monday she will be paying £20 a week for her children's school meals. Does the Secretary of State realise that that case was referred to my by Bradford's citizens advice bureau, the funding of which has been taken away by Bradford city council, which is threatening to close benefit shops and the welfare rights campaign—

Mr. Speaker

Order. A question must be related to the statement.

Mr. Moore

I do not wish to comment on Bradford city council, because it would not be appropriate to do so. As to the first part of the hon. Gentleman's question, there is no comparison between the position of a widow under a Conservative Government and the appalling characteristics of being a widow under a Labour Government.

Mr. Michael Stern (Bristol, North-West)

Does my right hon. Friend agree that his statement will be welcomed by the recipients of family credit, not only for the substantial additional funding that he has announced, but because the total spending on family credit is already running well above the Government's original estimate? Does he agree that one possible reason for the apparently low take-up might be that families, unlike the offices of the Department of Social Security, have a better idea of all their sources of income and therefore know that they are not entitled to it in the first place?

Mr. Moore

I shall not go into detail on my hon. Friend's last point, but he is right to say that although the caseload is less than we would like, it is running at profiled expenditure, which shows that people are applying effectively for family credit. I should like to encourage further take-up, despite the increased costs that are associated with it.

Mr. Dennis Skinner (Bolsover)

Is the Minister aware that old-age pensioners in this country receive, on average, £20 a week less than those in the Common Market? Is he further aware that later today a Treasury Minister will introduce the Third Reading of the European Communities (Finance) Bill, which will hand over £765 million to the Common Market? Why did he not have the guts to fight the Chief Secretary to the Treasury for that money and put it on child benefit or give it to old-age pensioners? When he finds the person who leaked the document that has been referred to this afternoon, will he recommend to the Prime Minister that he or she should get a job as a commissioner in Brussels?

Mr. Moore

I understand why the hon. Gentleman is not welcome in the chair of the national executive committee. Never have I heard such complete inaccuracy. His European Economic Community comparisons are utterly wrong. [Interruption.] It is a typical example of latter-day Socialism, and it is a mistake that the hon. Member for Livingston (Mr. Cook) would never make. Only three EEC states, including the United Kingdom, have flat-rate pensions. The hon. Gentleman seems to want earnings-related pensions, but most poor people in the Community do not have as good pensions as those in the United Kingdom. If that is what the hon. Gentleman wants, it is a new kind of Socialism.

Mr. Jerry Hayes (Harlow)

I warmly welcome my right hon. Friend's statement, but does he not think it ridiculous and downright unfair that higher-rate taxpayers should pocket £1.1 billion of taxpayers' money through child benefit? When does he intend to withdraw this privilege, because we then could target the many mothers who rely on child benefit as a lifeline but who are just above the level for family credit?

Mr. Moore

My hon. Friend shared an election platform with me and fought the election on the manifesto, which made our position clear. I shall stick to that manifesto commitment. We shall not go the way that my hon. Friend would like, because we are committed to the manifesto for this Parliament. I welcome my hon. Friend's support, and he will know that I have been successful, within that manifesto commitment, in achieving targeting.

Mr. Alistair Darling (Edinburgh, Central)

Does the Secretary of State accept that the major problem with the benefit system is that he has made thousands of people ineligible for benefit? For those who receive benefits, the amounts that have been announced will not begin to meet their increased housing, heating and food costs. Surely child benefit is no more indiscriminate than giving tax cuts to those on top rates, who can hardly be said to be in need.

Mr. Moore

I genuinely cannot equate the latter part of the hon. Gentleman's question, to which I listened carefully, with the first part of it. If he believes what he said in the first half of his question, he should welcome with open arms all that I have said today.

Mr. Quentin Davies (Stamford and Spalding)

Does my right hon. Friend recall the inflation rates that prevailed under the last Labour Government, and that benefits, whether they were theoretically indexed or not, were losing 10 or 12 per cent. of their real value every six months? Does my right hon. Friend agree that that casts an interesting light on the meaning of "increasing benefits", as used by the Opposition?

Mr. Moore

My hon. Friend is right and I can give him an exact illustration. Pensioners with savings during that last unlamented period of Labour Government saw a decrease in the value of their income from savings of 3.4 per cent. per year—a fall each year and an overall fall of 16 per cent. over the period—compared with an average increase over the past nine years of 7 per cent. per year. That is the reality of controlling inflation and helping pensioners with their savings.

Mrs. Alice Mahon (Halifax)

Is the Secretary of State aware that, in the real world of the family, income is often not shared fairly? The Government's claim to be taking women's issues and the unfair treatment of women seriously will be viewed cynically because, for two years running, the right hon. Gentleman has taken away the only income that many women in a family have as of right?

Mr. Moore

I again remind the hon. Lady of the reality of family credit, which enables the mother to receive the income. I hope that the hon. Lady will encourage people, especially those with low earnings, to benefit from that. In this uprating statement I have been able to add more than those people would have received if we had simply increased child benefit.

Mr. Peter Thurnham (Bolton, North-East)

If payments on family credit are running at about the original provision, does that not show what an excellent scheme this is, targeted towards and paid to those mothers most in need?

Mr. Moore

My hon. Friend is absolutely right.

Dr. Norman A. Godman (Greenock and Port Glasgow)

With regard to the right hon. Gentleman's remarks about income support assistance to meet the poll tax and rates charges, I remind him that no deduction can be made from a social security payment without the claimant's consent. Will the Secretary of State give an assurance that that rule will not be changed? Given the lower take-up of community care grants under the social fund, will the right hon. Gentleman give an assurance than in areas such as the one that I represent, where there is still a lamentably high level of poverty, he will encourage a take-up campaign? I ask the right hon. Gentleman for a fairer-minded answer than the sleekit response that he gave to my hon. Friend the Member for Cunninghame, North (Mr. Wilson).

Mr. Moore

I never intend to be rude across the Floor of the Chamber and, if I was, I unreservedly apologise. I am always interested in arguing rationally and logically. I genuinely meant that if all of us looked at the relative position of the benefit structure, and looked a little more carefully at family credit, we might be able to help much more of the low-paid employees in our constituencies.

I have listened carefully to the points that have been made. Rather than make a commitment, I should like to consider the hon. Gentleman's first point. I take entirely his second point about community care grants. Over the past six weeks I have visited benefit offices extensively. I have been trying to promote precisely that point. I shall look more carefully at that matter from the hon. Gentleman's point of view.

Mr. John Battle (Leeds, West)


Mr. Speaker

Order. The hon. Member has not been standing.

Mr. Battle

On a point of order, Mr. Speaker.

Mr. Speaker

It is not a point of order; and I am on my feet. I shall try to call those hon. Members who have been standing. I hope that they will not put questions that have already been put or make debating points which could properly be made in the debates that are certain to follow.

Mr. David Sumberg (Bury, South)

I, too, congratulate my right hon. Friend, not only on the contents of his statement, but on his robust delivery. Bearing in mind that the Labour party is supposed to believe in the principle "from each according to his means, to each according to his needs", should not my right hon. Friend expect overwhelming support from the Labour Benches for something that does just that?

Mr. Moore

In looking at these issues, I am genuinely bewildered by the inability of the Opposition—other than one or two thoughtful Members—to realise that they seem to be drifting a long way from what I always regarded as the Beveridge base and some parts of Socialism.

Mr. Harry Greenway (Ealing, North)

Is my right hon. Friend aware that recent winters have been much more severe in London and the south of England than in Scotland and other parts of the nation and that, as a matter of interest, the Scots did not experience the hurricane last year? Will my right hon. Friend say specifically by how much the heating allowance will increase? I warmly welcome his improved arrangements. Will my right hon. Friend undertake to simplify the difficult form which pensioners must complete to obtain their allowance?

Mr. Moore

I shall certainly look at the form. I cannot be precise about the amounts of money, because this is not cash limited. We have enormously increased the number of those potentially eligible for it, and theoretically we will double the approximate amount of money available per year. Because of the extension of eligibility and entitlement—which I think everyone welcomes—if we had a severe winter, we would obviously spend considerably more money than I had allocated to the budget.

Mr. Patrick McLoughlin (Derbyshire, West)

Would my right hon. Friend care to reflect and give the House a little more information on the levels of support for the community charge? Will he be careful when listening to the Opposition's complaints, because it is the Opposition who go around the country encouraging Labour councils to spend more? My right hon. Friend's allocation will not go as far as we would like, mainly because Labour-controlled county councils are spending at high levels, which means that they get high levels of community charge. The one way in which the Labour party could help is by starting to encourage their councils to act more responsibly.

Mr. Moore

I take the points that my hon. Friend has made and will draw them to the attention of my right hon. Friend the Secretary of State for the Environment. The factors that he has mentioned were taken into account in our estimates.

Mr. Neil Hamilton (Tatton)

Does my right hon. Friend recognise that there is a warm welcome from Conservative Members for him personally as well as for his statement? Does he recognise also that there is a growing understanding of the perversity of child benefit, which maximises the benefits for the rich and gives no benefit to the poor, and that there is growing demand among Conservative Members to reconsider the need for this benefit? Where does my right hon. Friend put the behaviour of the hon. Member for Livingston (Mr. Cook) in the scale of contemptibleness, in acting as an accessory to theft and breach of confidence during the past few days? Does my right hon. Friend regard it as better—

Mr. Dobson


Mr. Speaker

Order. That sort of comment does not help. One question is enough to ask. Hon. Members should not make debating points.

Mr. Hamilton

The propriety of such actions is immensely important for our political system, Mr. Speaker.

Mr. Speaker

Order. There should be consideration for others in the Chamber. Time is getting on.

Mr. Moore

On the specific point about child benefit, my hon. Friend was right to say that there are some perverse features. That, I imagine, is one reason why, when Barbara Castle and the former Labour Government established it, they were anxious not to secure annual indexation.

Mr. James Couchman (Gillingham)

Did my right hon. Friend have in mind when he made his decision the fact that the 1985 review found that the greatest poverty occurred among families on low incomes, whether earned or benefit? Is it not therefore nonsense that the product of 4p in the pound of income tax should be devoted to a universal benefit which does not differentiate between the duchess and the wife of a dustman?

Mr. Moore

My hon. Friend makes his point, but I remind him that my assessment is entirely on the basis of the existing system and I make judgments, as I must in a statutory sense, only for this particular year.

Mr. John Redwood (Wokingham)

Will my right hon. Friend ensure that there is a full inquiry into the leaked letter, even though the Opposition spokesman, the hon. Member for Livingston (Mr. Cook), has discovered that what he thought would he a useful offensive weapon was a boomerang, which has done him great damage?

Mr. Moore

I went as far as I was going to go on this subject earlier in the exchange.

Mr. Nicholas Bennett (Pembroke)

Will my right hon. Friend comment on the justice of a single taxpayer earning £6,000 a year contributing in his taxes to the income of a married couple with a joint income of £50,000 a year, who have two teenage children and live in Ealing? If that is unfair, does my right hon. Friend not think that, when the Conservative Government are re-elected for a fourth term, we should consider taxing child benefit, or at least ensure that those paying the 40 per cent. tax rate are subject to a taper so that that money is taken back?

Mr. Moore

I look forward to the detail of my hon. Friend's ideas in advance of our next election victory.

Mr. Tony Marlow (Northampton, North)

Can my right hon. Friend say which makes it more difficult to have an objective assessment of this very important issue—the grubby little sneak who smuggles information out of Government Departments, or the weasly little rat who abuses and misconstrues it?

Mr. Dobson


Mr. Speaker

Order. Perhaps I may be allowed to deal with this. If an aspersion was cast in that question on a Member of the Front Bench, will the hon. Member for Northampton, North (Mr. Marlow) please withdraw it.

Mr. Marlow

In the words of the Leader of the Opposition, Mr. Speaker, I respect your judgment greatly, and on that basis I withdraw the word "sneak"—I mean "rat".

Mr. Tim Janman (Thurrock)

My right hon. Friend is to be congratulated on negotiating an excellent package in recent negotiations with the Treasury. I am sure that he has done better than many other Departments will do. Does my right hon. Friend agree that the tax cuts of which the hon. Member for Glanford and Scunthorpe (Mr. Morley) complains are the driving force behind his ability to deliver this package to the House today in terms of the increase in revenue? On Tuesday the Opposition complained about inflation going up to 5.9 per cent., but today they ask for an increase in spending on a universal benefit which is not directed at those in need and which not only goes to the less well off but is also a millionaire's meal ticket. Does my right hon. Friend agree that that is utter hypocrisy?

Mr. Moore

My hon. Friend is absolutely right. I cannot make a judgment without taking into account the major changes that have occurred in the past year both in our tax system and in the pattern of earnings. I am very mindful of the fact that 80 per cent. of families with children are taxpayers.

Mr. John Battle (Leeds, West)

When the statement on pensions is put together in people's personal budgets with the statement on housing benefit, pensioners in this country will lose yet again. Are not the Government's manifesto statements and pledges proving to be deliberately placed ambiguities of language calculated to deceive the British people?

Mr. Moore

I have no doubt that the British people will continue, as they have in the past, to elect—[Interruption.] The contempt of some people, including the shadow Leader of the House, for the electorate is almost beyond belief. The British people will recognise the reality of what the Government have achieved in terms of basic improvement in their welfare. In the past eight-plus years pensioners' average income has improved by an average of 3 per cent. per year, compared with an increase of only 0.6 per cent. per year in the five tragic years of Socialism.

Following is the schedule of main proposed social security benefit rates from April 1989:
Weekly rates unless otherwise shown Old rates 1988 £ New rates 1989 £
Attendance Allowance
higher rate 32.95 34.90
lower rate 22.00 23.30
Child Benefit—each child 7.25 7.25
Child's Special Allowance 8.40 8.95
Dependency Increases
Adult Dependency Increases For spouse or person looking after children, with:—
retirement pension on own insurance, invalidity pension, unemployability supplement and, if beneficiary over pension age, unemployment benefit 24.75 26.20
non-contributory retirement pension, invalid care allowance and severe disablement allowance 14.80 15.65
sickness benefit if beneficiary over pension age 23.65 25.10
unemployment benefit 20.20 21.40
maternity allowance/sickness benefit 19.40 20.55
Child Dependency Increases For each child with:—
retirement pension, widows benefit, invalidity benefit, invalid care allowance, severe disablement allowance, higher rate industrial death benefit, unemployability supplement and sickness/unemployment benefit if beneficiary over pension age 8.40 8.95
Earnings rules
Retirement pension 75.00 75.00
Invalid care allowance 12.00 12.00
Unemployment benefit (daily rate) 2.00 2.00
Therapeutic earnings limit 27.00 28.50
Industrial injuries unemployability supplement permitted earnings level (annual amount) 1,404.00 1,482.00
Weekly rates unless otherwise shown Old rates 1988 £ New rates 1989 £
War pensioners' unemployability supplement permitted earnings level (annual amount) 1,404.00 1,482.00
Adult dependency increases with sickness benefit where claimant is
(a) under pension age 19.40 20.55
(b) over pension age 23.65 25.10
maternity allowance 19.40 20.55
unemployment benefit where claimant is
(a) under pension age 20.20 21.40
(b) over pension age 24.75 26.20
retirement pension, invalidity pension, severe disablement allowance, unemployability supplement where dependant
(a) is living with claimant 32.75 34.70
(b) still qualifies for the tapered earnings rule 45.09 45.09
retirement pension, invalidity pension, pension and unemployability supplement where dependant not living with claimant 24.75 26.20
severe disablement allowance where dependant not living with claimant 14.80 15.65
invalid care allowance 14.80 15.65
Child dependency increases
level at which CDIs payable with long-term benefits are affected by earnings of claimant's spouse or partner
for first child 90.00 95.00
for each subsequent child 11.00 12.00
Guardian's Allowance—each child 8.40 8.95
Hospital Downrating
20 per cent. rate 8.25 8.70
40 per cent. rate 16.50 17.40
Industrial Death Benefit Widow's pension
higher rate 41.15 43.60
lower rate 12.35 13.08
Industrial Disablement Pension
18 and over, or under 18 with dependants
100 percent. 67.20 71.20
90 per cent. 60.48 64.08
80 per cent. 53.76 56.96
70 per cent. 47.04 49.84
60 per cent. 40.32 42.72
50 per cent. 33.60 35.60
40 per cent. 26.88 28.48
30 per cent. 20.16 21.36
20 per cent. 13.44 14.24
Under 18
100 percent. 41.15 43.60
90 per cent. 37.04 39.24
80 per cent. 32.92 34.88
70percent. 28.81 30.52
60 per cent. 24.69 26.16
50 per cent. 20.58 21.80
40 per cent. 16.46 17.44
30 percent. 12.35 13.08
20 per cent. 8.23 8.72
Maximum life gratuity (lump sum) 4,470.00 4,730.00
Unemployability Supplement 41.15 43.60
plus where appropriate an increase for early incapacity higher rate 8.65 9.20
Weekly rates unless otherwise shown Old rates 1988 £ New rates 1989 £
middle rate 5.50 5.80
lower rate 2.75 2.90
Maximum special hardship allowance/reduced earnings allowance 26.88 28.48
Constant attendance allowance
exceptional rate 53.80 57.00
intermediate rate 40.35 42.75
normal maximum rate 26.90 28.50
part-time rate 13.45 14.25
Exceptionally severe disablement allowance 26.90 28.50
Invalid Care Allowance 24.75 26.20
Invalidity Benefit
Invalidity pension 41.15 43.60
Invalidity allowance
higher rate 8.65 9.20
middle rate 5.50 5.80
lower rate 2.75 2.90
Maternity Allowance 31.30 33.20
Maternity Payment 85.00 85.00
Mobility Allowance 23.05 24.40
One Parent Benefit 4.90 5.20
Pneumoconiosis, Byssinosis, Workmen's Compensation (Supplementation) and other schemes
Total disablement allowance and major incapacity allowance (maximum) 67.20 71.20
Partial disablement allowance 24.75 26.20
Unemployability supplement 41.15 43.60
plus where appropriate increases for early incapacity
higher rate 8.65 9.20
middle rate 5.50 5.80
lower rate 2.75 2.90
Constant attendance allowance
exceptional rate 53.80 57.00
intermediate rate 40.35 42.75
normal maximum rate 26.90 28.50
part-time rate 13.45 14.25
Exceptionally severe disablement allowance 26.90 28.50
Lesser incapacity allowance
maximum rate of allowance 24.75 26.20
based on loss of earnings over 32.95 34.90
Retirement pension
Category A or B 41.15 43.60
Category B (lower)—husband's insurance 24.75 26.20
Category C or D—non-contributory 24.75 26.20
Category C (lower)—non-contributory 14.80 15.65
Additional pension, guaranteed minimum pension and graduated retirement benefit increased by 5.9 per cent.
Increments to basic and additional pension, guaranteed minimum pension and graduated retirement benefit increased by 5.9 per cent.
Graduated retirement benefit (unit) (pence) 5.39 5.71
Weekly rates unless otherwise shown Old rates 1988 £ New rates 1989 £
Prescribed maximum amount of additional pension (also applies to widow's and invalidity benefits) (from 6 April) 34.75 41.71
Additional at age 80 .25 .25
Severe disablement allowance 24.75 26.20
Sickness benefit
Over pension age 39.45 41.80
Under pension age 31.30 33.20
Statutory maternity pay
Earnings threshold 41.00 43.00
Lower rate 34.25 36.25
Statutory sick pay
Earnings threshold 41.00 43.00
Standard rate threshold 79.50 84.00
Lower rate 34.25 36.25
Standard rate 49.20 52.10
Unemployment Benefit
Over pension age 41.15 43.60
Under pension age 32.75 34.70
Occupational pension abatement 35.00 35.00
War Pensions
Disablement pension (100 per cent. rates)
private or equivalent 67.20 71.20
officer (£ per annum) 3,504.00 3,712.00
Age allowances
40 per cent.—50 per cent. 4.70 5.00
over 50 per cent. but not over 70 per cent. 7.30 7.75
over 70 per cent. but not over 90 per cent. 10.45 11.10
over 90 per cent. 14.60 15.50
Disablement gratuity (base figures for calc purposes only)
specified minor injury 4,470.00 4,730.00
unspecified minor injury 2,458.00 2,601.50
Unemployability allowance
personal 43.70 46.30
adult dependency increase 24.75 26.20
increase for each child 8.40 8.95
Invalidity allowance
higher rate 8.65 9.20
middle rate 5.50 5.80
lower rate 2.75 2.90
Constant attendance allowance
exceptional rate 53.80 57.00
intermediate rate 40.35 42.75
normal maximum rate 26.90 28.50
part-time rate 13.45 14.25
Comforts allowance
higher rate 11.60 12.30
lower rate 5.80 6.15
Mobility supplement 25.60 27.10
Allowance for lowered standard of occupation (maximum) 26.88 28.48
Exceptionally severe disablement allowance 26.90 28.50
Severe disablement occupational allowance 13.45 14.25
Clothing allowance (£ per anum) higher rate 92.00 97.00
Weekly rates unless otherwise shown Old rates 1988 £ New rates 1989 £
lower rate 58.00 61.00
Education allowance (£ per annum) (max) 120.00 120.00
War widow's pension (private) widow 53.50 56.65
childless widow under 40 12.35 13.08
age allowance
(a) age 65 to 69 5.75 6.10
(b) age 70 to 79 11.50 12.20
(c) age 80 and over 14.45 15.30
child addition 12.00 12.60
Orphan's pension 13.15 13.80
Unmarried dependant living as spouse (maximum) 51.45 54.60
Rent allowance (maximum) 20.35 21.55
Adult orphan's pension (maximum) 41.15 43.60
Widower's pension (maximum) 53.50 54.65
Widow's benefit
Widow's payment (lump sum) 1,000.00 1,000.00
Widowed mother's allowance 41.15 43.60
Widow's pension
standard rate 41.15 43.60
age 54(49) 38.27 40.55
53(48) 35.39 37.50
52(47) 32.51 34.44
51(46) 29.63 31.39
50(45) 26.75 29.34
49 (44) 23.87 25.29
48 (43) 20.99 22.24
47(42) 18.11 19.18
46(41) 15.23 16.13
45(40) 12.35 13.08
Note: For deaths occurring before 11 April 1988 refer to age-points shown in brackets.
Income Related Benefits
Housing Benefit upper limit 8,000.00 8,000.00
Income Support and Family Credit upper limit 6,000.00 6,000.00
Amount disregarded (common provision) 3,000.00 3,000.00
Child's limit (common provision) 3,000.00 3,000.00
Tariff Income
£1 for each complete £250 or part thereof between amount of capital disregarded and capital upper limit
Income Support and Housing Benefit—Common Provisions
Personal allowances
under age 18 19.40 20.80
age 18–24 26.05 27.40
age 25 or over 33.40 34.90
Lone parent
under age 18 19.40 20.80
age 18 or over 33.40 34.90
both under age 18 38.80 41.60
at least one age 18 or over 51.45 54.80
Dependant children
under age 11 10.75 11.75
age 11–15 16.10 17.35
age 16–17 19.40 20.80
age 18 26.05 27.40
Family 6.15 6.50
Weekly rates unless otherwise shown Old rates 1988 £ New rates 1989 £
Lone parent (Income Support) 3.70 3.90
Lone parent (Housing Benefit) 8.60 8.60
single 10.65 11.20
couple 16.25 17.05
Pensioner (higher)
single 13.05 13.70
couple 18.60 19.50
single 13.05 13.70
couple 18.60 19.50
Severe disability
single 24.75 26.20
couple (one disabled) 24.75 26.20
couple (both disabled) 49.50 52.40
Disabled child 6.15 6.50
Income support
Maximum amounts for accommodation and meals in
(a) Hostels 70.00 70.00
Maximum special increases 17.50 17.50
(b) Residential care homes
old age 130.00 140.00
very dependent elderly 155.00 155.00
mental disorder (not handicap) 130.00 140.00
drug/alcohol dependence 130.00 140.00
mental handicap 160.00 165.00
physical disablement
(under pension age) 190.00 200.00
(over pension age) 130.00 140.00
others 130.00 140.00
maximum Greater London increase 17.50 23.00
(c) Nursing homes
mental disorder (not handicap) 185.00 195.00
drug/alcohol dependence 185.00 190.00
mental handicap 200.00 205.00
terminal illness 230.00 235.00
physical disablement
(under pension age) 230.00 235.00
(over pension age) 185.00 190.00
others (including elderly) 185.00 190.00
maximum Greater London increase 17.50 23.00
Allowances for personal expenses for claimants in hostels
single 10.30 11.95
couple 20.60 23.90
single 11.50 13.25
couple 23.00 26.50
Dependent children
under age 11 3.45 4.10
age 11–15 5.30 6.05
age 16–17 6.20 7.00
age 18 10.30 11.95
Private and voluntary residential care and nursing homes 9.55 10.05
Dependent children allowances above apply except—age 18 9.55 10.05
Hospital and local authority (Part III) accommodation 8.25 8.70
The Polish Home Ilford Park Housing costs 11.50 13.25
Deduction for non-dependants aged 18 or over and in remunerative work 8.20 9.15
Weekly rates unless otherwise shown Old rates 1988 £ New rates 1989 £
others, age 18 or over or on Income support and over 25 3.45 3.85
Low earnings threshold 49.20 52.10
Deductions for direct payment of fuel debt
5 per cent. rate 1.70 1.75
10 per cent. rate 3.35 3.50
Arrears of housing costs 1.70 1.75
Reduction in benefit for strikers 17.70 18.50
Standard earnings 5.00 5.00
Higher earnings 15.00 15.00
War pensions 5.00 5.00
Voluntary and charitable payments 5.00 5.00
Students covenanted income 5.00 5.00
Income from boarders 35.00 35.00
Expenses for subtenants
Furnished or unfurnished 4.00 4.00
Where heating is included, additional 6.70 7.00
Housing Benefit
Amenity deductions for
heating 6.70 7.00
hot water 0.80 0.85
lighting 0.50 0.55
cooking 0.80 0.85
all fuel 8.80 9.25
Non-dependant deductions Rent rebates and allowances aged 18 and over and in remunerative work 8.20 9.15
others aged 18 or over or on income support and over 25 3.45 3.85
Rate rebates, aged 18 or over 3.00 3.35
Low earnings threshold 49.20 52.10
Expenses for subtenants
Furnished or unfurnished 4.00 4.00
Where heating is included, additional 6.70 7.00
Earnings disregards where disability
premium awarded 15.00 15.00
various specified employments 15.00 15.00
lone parent 15.00 15.00
one of a couple in employment 10.00 10.00
single claimant 5.00 5.00
Other income disregards
charitable or voluntary payments 5.00 5.00
war pensions 5.00 5.00
students covenanted income 5.00 5.00
Family Credit
Adult Credit 32.10 33.60
Child Credit
under age 11 6.05 7.30
age 11–15 11.40 12.90
age 16–17 14.70 16.35
age 18 21.35 23.30
war pensions 5.00 5.00
voluntary and charitable payments 5.00 5.00
students covenanted income 5.00 5.00
Expenses for subtenants
furnished or unfurnished 4.00 4.00
where heating is included, additional 6.70 7.00
Applicable amount (ie taper threshold level) 51.45 54.80
Maternity Payment 85.00 85.00